Changes proposed to New York bankruptcy law

Some consumer advocates and bankruptcy attorneys have joined forces to persuade New York Governor David A. Paterson to sign a bill that would amend New York bankruptcy law. Specifically, the bill would increase the bankruptcy exemption amount for consumers' cars and houses, according to WNYT.com.

Current New York bankruptcy law reportedly protects $2,400 in value for a car, meaning that consumers who file for bankruptcy may keep their vehicle if it is worth less than this. In the event that their vehicle is worth more, it may be liquidated, and revenue from its sale less the exemption amount would be allocated to creditors. If the bill passes, the exemption amount would rise to $4,000, according to the news source.

The Wall Street Journal reports that the bill would also affect the housing exemption - the amount of home equity protected from liquidation. It would reportedly raise the current exemption of $50,000 to anywhere between $75,000 to $150,000, varying by county.